Fanhai International School of Finance
Shanghai, China 200433
Institutional Affiliation: Fudan University
Information about this author at RePEc
NBER Working Papers and Publications
|May 2020||International Equity and Debt Flows: Composition, Crisis, and Controls|
with : w27129
We propose a theory of endogenous composition of capital flows that highlights two asymmetries between international equity and debt financing. In our model, poor institutional quality leads to an inefficiently low share of equity financing as well as an inefficiently high volume of total inflows. The required optimal capital controls naturally become looser as a country's institutional quality improves. Our story differs in important ways from an alternative narrative focusing on collateral constraint.
|March 2020||Capital Flows, Real Estate, and Local Cycles: Evidence from German Cities, Banks, and Firms|
with , , : w26820
We study how an aggregate bank flow shock impacts German cities' GDP growth depending on the state of their local real estate markets. Identification exploits a policy framework assigning refugees to cities on a quasi-random basis and variation in non-developable area for the construction of a measure of exposure to local real estate market tightness. We estimate that the German cities most exposed to real estate market pressure grew 2.5-5.0 percentage points more than the least exposed ones, cumulatively, during the 2009-2014 period. Bank flow shocks shift credit to firms with more collateral. More collateral also leads firms to hire and invest more in response to these shocks.
|December 2019||Capital Controls: A Survey of the New Literature|
with : w26558
This paper reviews selected post-Global Financial Crisis theoretical and empirical contributions on capital controls and identifies three theoretical motives for the use of this policy tools: pecuniary externalities in models of financial crises, aggregate demand externalities in new-Keynesian models of the business cycle, and terms of trade manipulation in open economy models with pricing power. Pecuniary and demand externalities offer the most compelling case for the adoption of capital controls, but macroprudential policy can also address the same distortion. So, in general, capital controls are not the only instrument that can do the job. If evaluated through the lenses of the new theories, the empirical evidence reviewed suggests that capital controls can have the intended effects, ev...